by Susan S Parks, MRP, PSA, HOC, C2EX
A home is the biggest financial commitment most people make, so you should have someone knowledgeable to guide you on that journey. Your REALTOR® is that person.
To put the power of your REALTOR® to work for you, you will want to sign what is known as a Buyer Brokerage Agreement. What is it, and why should you have one? Let’s take a look!
What is a Buyer Brokerage Agreement?
The Buyer Brokerage Agreement is a legally binding contract signed between the buyer and your REALTOR’s® broker. It spells out all the fiduciary duties owed to you by your REALTOR® and the responsibilities of both parties. This Agreement must be in writing with all parties receiving a copy. There also needs to be an expiration date and other information on terminating the relationship with the Broker should you need to.
The Agreement will also state the compensation owed to the broker. That can take the form of:
- A percentage of the sales price,
- A flat fee, or
- Some combination of the two.
Your REALTOR® can discuss this portion of the Agreement with you, so that you fully understand what fees are charged and who is responsible for paying them.
Why do I sign with the Broker and not my REALTOR®?
All REALTORS® and real estate licensees are required to work under the supervision of a real estate broker. Your Agreement is with that Broker, who works with you through your REALTOR®. Likewise, any compensation paid is going to go to the broker, who will then disburse your REALTOR®’s commission and cover other costs incurred in the transaction.
What are these fiduciary duties owed by my REALTOR®?
Once the Agreement is signed, the REALTOR® must use their knowledge and skill on the behalf of their client, give the client advice and counsel, and perform other magisterial acts, including a promise to:
- Transact your business carefully.
- Obey your lawful orders.
- Be loyal to your best interests.
- Disclose all material facts and defects to you.
- Account for all the money and paperwork.
- Most importantly, keep your confidential information from the listing agent and seller.
By maintaining these duties, your REALTOR® will help you find a house in your price range and area you wish to live and secure the best terms for your purchase.
When should I sign a Buyer Brokerage Agreement?
Under Maryland law, the Agreement must be written and signed by the parties prior to showing any properties. Without an agreement in place, the buyer is not entitled to confidentiality and other fiduciary duties from the REALTOR®. In fact, without an Agreement, the agent is required to disclose the buyer’s negotiation strategy to the seller’s broker.
Having a Buyer Brokerage Agreement in place from the start protects you from having important information released to the seller, impacting your ability to negotiate for the home of your choice.
The buyer’s market can be rough. Don’t go it alone! Secure your real estate advocate through a Buyer’s Brokerage Agreement before embarking on your home search.
